Ahead of the holiday weekend, the Dow hit a new record high, and the Nasdaq came close, but it was the S&P 500 that took center stage, not only hitting a record high but topping the 6500 level.
What makes this even more impressive is that it just took 196 trading days to climb 500 points, which is a considerable rise, especially given that back in April.
The S&P 500 closed below 5000 at one point.
Well, joining me ahead of the holiday holiday weekend is Larry Torrelli, chief technical strategist and founder of the Blue Chip Daily trend report.
Larry, good morning.
Happy Friday.
So here we are on this Friday and the countdown is on to September.
So what are the primary drivers behind some of the bullish momentum we're seeing?
Good morning, Remy.
I, I think we're really riding the bullish earnings momentum for the most part, earnings came in very well.
AI earnings came in very strong.
Uh, we've seen very good results recently from some of the software companies like Snowflake.
So I think we've got bullish.
Earnings momentum and the the tariff inflation has really not taken a bite out of the market, I think as many had expected, so I think it's almost a rally on not as bad news as many had predicted.
Yeah, and Larry, it's hard to believe that it's been a week since the Jackson Hole statement coming out from Jay Powell, and this morning we got PC inflation figures.
Now last week, Fetcher Jay Powell delivered a more dovish tone, raising expectations for a Fed rate cut next month, and we did see a rotation into sectors that typically benefit from lower rates.
So how sustainable do you think this rotation is and what should investors be watching out for?
I believe this is the beginning of the rotation and, and you're right, Powell last week was much more dovish than I expected.
I still remember 2022 in Jackson Hole when he really put the brakes on the rally we had at the time, and he was surprisingly dovish, so I do not expect that as.
Dovish as he was on Friday, I do not expect that he won't deliver a rate cut September 17th.
PCE came in today 2.6% year over year.
That was in line with the forecast, so I believe investors should have some exposure to the cyclicals like home builders, regional banks, and small caps.
Yeah, and as we look ahead to next week Monday, markets will be closed for Labor Day here in the US, but the end of next week we will be getting that jobs market report with non-farm payrolls unemployment.
And the last time the jobs report came out, we have to keep in mind we got those revisions, so we will be. bracing ourselves and also keeping an eye on the data, but you mentioned earnings, and Nvidia does remain a long term buy despite short term post earnings volatility.
So given the results, what is your long term outlook not just for Nvidia, but also the AI sector?
Very bullish.
So Nvidia just reported 1 55% revenue growth, 61% earnings growth.
That's a massive, massive number for a company with a $4 trillion market cap.
So a little bit of short term volatility, the market's always looking for that big upside blowout, but demand is very strong, and they forecast. revenue growth going forward so we're seeing some some recent breakouts in the nuclear stocks which are related to AI data centers, but Nvidia remains the AI benchmark stock that held over the 50 day moving average on this pullback, and I expect that it's got much higher to go over the next 3 to 6 months at least.
Yeah, and Larry, sticking to the data and the stats.
September is historically the market's worst month and there is potential volatility up ahead as well as consolidation.
So how are you positioning portfolios to manage potential seasonal volatility?
September is historically the weakest month, so I'm just a little bit more defensive.
Nothing major.
Cash is a little bit higher, about 5 or 6%.
My recent buys have been a little bit smaller than usual, and I don't have any major sector overweight, so I was overweight tech for most of the year.
I reduced that just a little bit, so I'm still.
But I do know that with that September historic seasonality, I just want to stay in tune and not get caught on the wrong side of any volatility.
I think that the market is going to continue to be very volatile in the short term if we get any economic news that does not support a rate cut, but I do believe that we will get that rate cut.
Yeah, and finally, Larry, before I let you go, you mentioned some of the sectors, stocks that you're favoring, but what are the key themes investors should focus on for the remainder of 2025?
The sectors that I like the most right now are the financial sectors, so the big banks and brokers like JPMorgan, Goldman Sachs, they're breaking out.
The industrial sector has been very strong.
Stocks like General Electric, RTX Corp.
Defense is a very strong industry group.
It's got very bullish tailwinds.
Technology continues to be the leader.
Stocks like Nvidia, advanced microdevices.
In semiconductors, Palantirer remains an AI leader and also the nuclear stocks, stocks like GE Vernova, stocks like Camico and nuclear, uh, they are tied to the AI data center build out and those are themes I would focus on tech, industrials, financials, and also consumer discretionary has been very, very strong.
And if we get that rate cut, it should continue to support a strong consumer.
Yeah, and of course, I can't have a conversation with you without asking you about the S&P 500.
So what levels are you watching?
So S&P is very strong.
It's got support from 6150 to 6250.
So if we did get some September volatility, if there was any weakness going into that Fed meeting, you've got a really strong long term support line at 6150.
You've got shorter term support at 6250, but the S&P is in a very strong up trend.
It's over rising weekly moving averages.
It made a new all-time high this week.
It's pending making a new weekly closing high, so you've got a very strong weekly up trend.
But if there was any weakness or pullback, 6250 is the first support level that I would look for to hold.
OK, Larry, always great having you on the show.
Thank you so much for joining me and have a wonderful holiday weekend.
You too, Remy.
Thank you.
